How to plan ahead for unexpected medical care

Kyle Sadler  ·  Feb 01, 2017

As a financial planner, I identify with the Boy Scout motto of “Be Prepared.”

My life and career are centered on being prepared. My family vacation spreadsheet is legendary among friends and family. The detailed itinerary of daily activities, times, locations, and contact information are prime examples of my obsession with preparedness. I strive to embed the idea that, no matter what action in life is taken, a plan is always needed.

There is a direct correlation between preparation and saving money that applies to all areas of life, including health care. Whether the need can be shared or not, preparation results in savings. We are either keeping the share down for everyone, or saving on an expense that comes out of our personal budget.

Like you, I am concerned anytime there is an increase in an expense. Over the years, one thing I’ve learned is that the health care industry is a money machine. Our responsibility as Samaritan members is to be prudent and to effectively appropriate funds to the right sources. Just establishing a dinner-time conversation about a preparedness plan would cause a positive effect on future share amounts. I do feel that a more advanced plan by members would lead to an even more positive effect on keeping share amounts down. Either way, having a preparedness plan will assist in hedging the rising cost of health care as it continues to affect our monthly share.

It’s especially important to have one before an emergency strikes. The last thing you want to have to do is to make important decisions in the middle of a crisis, when emotions are running high.

Steps in organizing a plan

When you get sick or there’s an emergency, you don’t want to have to suddenly spend time in research. By starting with an organized plan, the brain just has to follow steps.

That’s where preparation comes in handy.

First, I recommend everyone have a primary care physician, children should have a pediatrician, and individuals should have a specialist for specialized care.

Next, let’s look at the six primary types of service levels available when a health care need arises unexpectedly:

  • Call-in prescription.
  • Walk-in clinics.
  • Primary care physician office.
  • Urgent care center.
  • Traditional hospital/freestanding emergency rooms.
  • Trauma center.

Now that the six service levels are identified, research and decide on a family emergency plan.

Here’s what I did: I called our primary care physician and pediatrician to ask what services and emergency needs they handle. I was surprised to find out what they can and can’t handle. Here’s an example: Our pediatrician does not handle emergencies requiring stitches, but they do handle broken bones because they have on-site X-ray facilities. She also noted that they did not handle compound fractures where the skin has been breached because it would require stitches and possibly surgery. Our primary care physician, however, offered the opposite services: That office will do stitches but did not have X-ray capabilities. In the case of an emergency involving a fracture, they would refer us to an orthopedist.

By checking ahead, we were able to change our game plan to avoid an office visit charge and time spent in a waiting room at our primary care physician’s office if my wife or I were to break a bone. Instead, we would proceed immediately to an orthopedist that has the proper equipment. Oh, and if anybody in our family needed stitches, we would just go to our primary care office, and they would sew us up.

I also made a few phone calls and spent about an hour on websites researching clinics and urgent care centers in my area. The total time researching: around two hours.

The cost consideration

Picture the service levels as an upward sloping line. This means that a call-in prescription would be at the bottom of the curved line and would mean receiving basic, single-point and simple service and then ascending to the trauma center level, where acute specialization for all needs is handled. Now, imagine a similar upward sloping line paralleling the other line—a cost-for-service line. Cost is generally in line with the curved line. However, there tends to be an anomaly (a rapid spike) at the second to last (emergency room) level with regard to cost.

The reason for the “rapid spike” is that at the emergency room level of care, we are in a “no other alternative” model. Hospitals and emergency care facilities know that in a life-or-death situation, the patient will not have time to call around for the “best deal.” This shouldn’t be unsettling because this is how most organizations in capitalism operate: The more of a demand there is for a product or service is in a time of need, the more of a premium will be associated with that product or service.

This reality explains why advance planning is needed.

Additionally, there is a slight deviation of even a higher spike for those seeking emergency care in Texas or Colorado. If you are in one of those states, please do research prior to visiting an independently owned, freestanding ER. Understanding their billing and operations may be a deterrent when making those emergency decisions.

I’m not down on hospital emergency rooms; there is a specific place for them. We need to remember, though, that emergency rooms are for emergencies. The U.S. Department of Health and Human Services reports that 60 to 80 percent of all emergency room cases can be treated by one of the four lesser service levels. Just by visiting the emergency room will drive up cost by $500 to $800 because of the traditional up-front emergency room cost.

Case in point: Prior to becoming a member with Samaritan Ministries, our daughter broke her arm. I put our action plan in place. We visited our pediatrician and our total bill was about $800. However, some friends of ours had an identical incident and they took their daughter to an ER. The final bill was $1,400. Both children had hairline fractures and both received fiberglass casts.

Let me put this into an organization-level perspective. In any given recent month, Samaritan Ministries receives approximately 6,000 needs. Let’s just say that 20 percent (which is a fabricated number and only for this illustration) of the needs, or 1,200, were emergency room visits. Now multiply this number times the $500 overage associated with emergency rooms, which is $600,000 a month! OK, I know, not every one of those 1,200 needs each month are emergency room visits, but the point is that the cost can add up quickly.

We are to be stewards of the finances we have been blessed with. We are to be held accountable to all of our fellow Samaritan members when selecting care. Not that we have to restrict our choice of health care provider merely for the sake of saving other members money, but we don’t want to pay too much when it could have been avoided.

Implementing emergency procedures

The cycle of any plan is to organize, formalize, implement, and monitor. We’ve looked at the initial two stages. After constructing your family’s preparedness plan, the requirement of implementing the plan at the time of the emergency would flow something similar to this:

  • Identify the emergency and determine the care level required. (In the case of all life-threatening emergencies, please proceed to a hospital emergency room.)
  • Inform the billing person that you are a “cash-pay” patient at the time of admittance and at checkout.
  • Ask for the discounted “cash-pay” amount.

As time goes on and the health care industry and your family needs continue to develop, I always recommend the final step in the cycle: Monitor your family’s plan. Monitoring will assist in the fact that we learn from our experiences and can develop a more personalized plan for our family. The more personalized we can get, the more happiness that will be brought to our family.

Kyle A. Sadler, CRC® is a member of Samaritan Ministries. He is president of Precept Wealth Management. Neither Mr. Sadler nor Precept Wealth Management are otherwise affiliated with Samaritan Ministries. The opinions of this article are those of Mr. Sadler and are not necessarily the opinions of Samaritan Ministries or those affiliated. For more information about Mr. Sadler, please feel free to visit www.preceptwm.com.